Aflac Incorporated (AFL) just declared $0.45 quarterly dividend increase. This is an increase of 4.7% from $0.43.
I own 25 shares, so this will increase my annual dividend income by $2.00.
AbbVie Inc. (ABBV) also announced a dividend increase. However, ABBV increased it by a whopping 10.9%. They declare a $0.71 quarterly dividend. Before the increase, it was $0.64.
I own 52 shares of ABBV. This will increase my annual dividend income by $14.56.
Let’s talk about AFL first. The dividend increase has been in-line in recent history. AFL has been increasing it by 2 cents every four quarters. This is great and concerning. The great thing about these increases is that it is higher than the rate of inflation. My concern is, if AFL continues to raise its dividend by two cents every year, then the dividend raise percentage will continue to decrease and might be lower then inflation.
The current dividend payout ratio is only 25%, so AFL does plenty of room to grow it a little bit more. Hopefully, they start to do that.
I find the shares to overvalued when I compare it to the last 10 years. I would consider AFL in the low $60 a share. I recommend a HOLD at this level.
Now let’s talk about ABBV. I am really happy how ABBV has been performing and the dividend increase that they declared. They have a dividend payout ratio of 59% and analysts expect that earnings will grow at a mid-teens level, so I see ABBV will continue to grow its dividend at a double-digit rate. I am up almost 50% and I see ABBV continuing to go up.
The only issue I see is that the stock is fair to overvalued. I would like for shares to be in the low $80. For now, I would recommend a HOLD.
Own any of the companies mentioned above? How do you feel about the dividend increase?
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